Correlation Between Broadwind and EON SE

Can any of the company-specific risk be diversified away by investing in both Broadwind and EON SE at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Broadwind and EON SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Broadwind and EON SE, you can compare the effects of market volatilities on Broadwind and EON SE and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Broadwind with a short position of EON SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadwind and EON SE.

Diversification Opportunities for Broadwind and EON SE

-0.78

Correlation Coefficient

Broadwind  EON SE

Pay attention - limited upside

The 3 months correlation between Broadwind and EON is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Broadwind and EON SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON SE and Broadwind is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Broadwind are associated (or correlated) with EON SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON SE has no effect on the direction of Broadwind i.e., Broadwind and EON SE go up and down completely randomly.

Pair Corralation between Broadwind and EON SE

Assuming the 90 days trading horizon Broadwind is expected to under-perform the EON SE. In addition to that, Broadwind is 1.17 times more volatile than EON SE. It trades about -0.14 of its total potential returns per unit of risk. EON SE is currently generating about 0.13 per unit of volatility. If you would invest  1,100  in EON SE on December 27, 2024 and sell it today you would earn a total of  250.00  from holding EON SE or generate 22.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Broadwind  vs.  EON SE

Broadwind

Risk-Adjusted Performance

Very Weak

Over the last 90 days Broadwind has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

EON SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EON SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, EON SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broadwind and EON SE

The main advantage of trading using opposite Broadwind and EON SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadwind position performs unexpectedly, EON SE can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in EON SE will offset losses from the drop in EON SE's long position.

The idea behind Broadwind and EON SE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.